The Marionettes Company is noted for an exceptionally impressive line of Mardi Gras masks. Marionettes has established the following selling and distribution support activity-cost pools and their corresponding activity drivers for the year 20X5:

 

                        Activity Cost                    Cost driver

                        Marketing                    $30,000           $500,000 of sales

                        Customer service         10,000           5,000 customer

                        Order execution             5,000              100 orders

                        Warehousing                  5,000                50 product lines

           

Required:

a.      Determine the activity-cost-driver rate for each of the four selling and distribution activities. 

b.      Under what circumstances is it appropriate to use each of the activity-cost drivers? 

c.      Describe at least one possible negative behavioral consequence for each of the four activity-cost drivers.